"We had a very mild winter, natural gas prices were very low by historical measures and the (Environmental Protection Agency's) new regulations continue to put pressure on coal, " the CSX executive said following its earnings report.

This is significant for CSX, since coal makes up a quarter of the railroad's total shipments, the CEO said. Coal is also important for the other railroads, including Union Pacific and Norfolk Southern .

The rest of the business is doing much better, however. "We're seeing good growth in the intermodal market and great growth in the automotive market, as well, " Ward said.

CSX Beats Street But Profits Lower

Michael Ward, CSX Corporation president, chairman, & CEO, breaks down the transportation company's third quarter earnings of $0.44 EPS on $2.89 billion in revenues, and discusses the impact of coal costs on the company's bottom line.

If you strip out coal, CSX's markets were up four percent in the quarter. That does represent a slowdown from the six percent increase seen in the second quarter, as "we are seeing the economy moderate somewhat, " the rail executive said.

The auto market could remain an area of strength. Ward noted that at 10.5 years, the U.S. auto fleet is the oldest it has ever been. With Americans not buying new cars during the recession , Ward said "we're catching up from some of that lack of demand."

For the third quarter, CSX posted earnings of 44 cents a share, a penny ahead of estimates, while revenue came in at $2.9 billion, down 2 percent.